Stephenson, who was set to earn $4.3 million in the upcoming season, appeared in all 82 games for the Pacers in 2017-18. The 27-year-old averaged 9.2 points, 5.2 rebounds and 2.9 assists per game in the regular season and 10.4 points in seven postseason games.

While Stephenson's relentless effort played a role in the Pacers taking the eventual Eastern Conference champion Cavs to seven games in the first round, the decision to decline his team option was made with the future of the franchise in mind.

''This was a very difficult decision, but as free agency begins on July 1, we want to have flexibility so that we can prepare for all of our available options,'' Pacers President of Basketball Operations Kevin Pritchard said.

Should forward Thaddeus Young opt out of the final year of his deal, in which he is owed nearly $14 million, Indiana will have the cap space to be major players in the free agent market.

According to ESPN's Bobby Marks, Indiana could end up with enough cap flexibility to offer a max contract this offseason.

The cap situation in Indiana is fluid based on the $13.9M Thaddeus Young player option and the partially guaranteed $10M Al Jefferson contract. The Pacers currently project to have anywhere from $10M to $30M in room.

After trading Paul George in the 2017 offseason, the Pacers (48-34) finished fifth in the Eastern Conference last season. While a reunion with George is unlikely, Indiana's cap situation will allow it to surround 2018 Most Improved Player Victor Oladipo with more complementary talent.